Reuters A natural gas-powered UPS delivery van is shown in downtown Los Angeles, California, U.S.
- United Parcel Service announced it would offer discounted shipping to Stamps.com customers Monday.
- Stamps.com stock surged as much as 24% in early trading Tuesday on the news.
- The deal is the first agreement for Stamps.com since it cut ties with the United States Postal Service in February.
- Watch Stamps.com trade live on Markets Insider.
Stamps.com is surging Tuesday morning after United Parcel Service announced Monday that it would offer discounted shipping rates to the company's customers.
Shares were up as much as 24% in Tuesday morning trading. Before the rally, shares of Stamps.com were down 51% year-to-date. UPS shares slid as much as 6% on the news.
The partnership with UPS is through UPS's Digital Access Program, which is aimed at making its logistics services more broadly available through partnerships with other companies, UPS said in a press release Monday. Through the deal, UPS will offer discounted shipping to Stamps.com's customer base of more than 740,000.
The partnership with UPS is the first that Stamps.com has secured since it announced in February that it cut ties with the United States Postal Service, a crucial partnership for the internet-based postage company. Shares plummeted as much as 58% on the news.
In May, shares dropped an additional 52% when the company significantly cut its 2019 earnings forecast and said it expected declines in 2020 and 2021 as well.
"Overall, we see the STMP/UPS collaboration as a positive for STMP's multi-platform build out and could be the catalyst necessary to reverse the trend in shares YTD," wrote Darren Aftahi, an analyst at Roth Capital Partners, in a note Tuesday.
While the new deal might not match the legacy rates that Stamps.com had with USPS, it is a step in the right direction, Aftahi said.
"We believe the discounted rates, up to ~55%, should aid STMP customers with greater access to competitive rates," and could also drive volume and aid shipping margins, he wrote. He reaffirmed his neutral rating on the company but boosted his price target to $85 from $52.
Stamps.com is still down 40% year-to-date.
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